Boom times in Ottawa

For a couple of days late last spring the EY Centre, a convention space just south of downtown Ottawa, provided a glimpse of a world that’s rarely visible by the light of day. No, this was not some kind of fantasy themed entertainment spectacle, not a gargantuan specialty wedding show ahead of the summer nuptials season. This was CANSEC 2016, a weapons fair that annually attracts some of the world’s largest arms dealers to our national capital. Security is, needless to say, tight, and media passes carefully screened for surprises.

Posters handed to visitors at the door by representatives of the Nammo company depicted several dozen variants of assault and sniper rifles, machine guns and grenade launchers set against a stark black background. They spoke of real weapons at work in the real world. Real as the 20-foot missiles inside the convention hall, the tanks parked in a lot at the back, the ammunition of various sizes and applications, and the delegation from the Colombian military—a security force cited by Amnesty International for human rights crimes including extrajudicial executions—decked out in deep green uniforms and supernaturally shiny shoes.

CANSEC turns 20 this year. Organized by the Canadian Association of Defence and Security Industries (CADSI), a lobby group for the Canadian military goods and services industries, the event speaks to a feature of Canada’s capital city that often goes unacknowledged. Ottawa is known for the peacekeeping monument between the National Gallery and touristy Byward Market. It is the city that lent its name to the Ottawa Treaty on eliminating the use of anti-personnel landmines. But Canada is also an increasingly important hub of the global arms trade, and its capital city has played a key role in solidifying that status.

IHS Jane’s, the global military trade magazine, recently reported that Canada has become the world’s sixth largest arms exporter, and the second largest supplier of weapons to the Middle East (after the United States), having risen from sixth place between 2015 and 2016. Moving with the times, some of the signage at the 2016 CANSEC conference welcomed delegates in English and Arabic.

CADSI is also expanding its outreach in the embattled region at—let’s be honest—an opportune time. The organization provides an umbrella for Canadian military industries at the annual International Defence Exhibition and Conference in Abu Dhabi, United Arab Emirates, which grants Canadian firms access to “a unique platform to establish and strengthen relationships with government departments, businesses and armed forces throughout the region,” according to the lobby group.

But there are problems amid the boom times. Lucrative military relationships have been making their way onto the front pages and nightly news broadcasts, and the coverage hasn’t been flattering. At the centre of the media storm is the $15-billion, multi-year deal to sell Canadian-made light armoured vehicles (LAVs) to Saudi Arabia, a country engaged in a vicious civil war in neibhouring Yemen, and that is described by the U.S. organization Freedom House as “the worst of the worst” among human rights violators.

The Saudi deal, which we might not have heard of had it not been for a legal challenge by Université de Montréal professor Daniel Turp and subsequent investigations by the Globe and Mail, represents the largest Canadian weapons transfer in history. It’s also only the tip of the iceberg. A United Nations report has alleged that a Canadian company with a factory in the UAE (Streit Group) sold weaponry into the bloody civil war in Sudan. Canadian military sales to other countries with less than stellar human rights records suggest a country that is willing to routinely disregard its export controls to pad GDP growth.

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The controversy was just kicking off when CANSEC 2016 got under way and evasive manoeuvres were needed. At the opening press conference, CADSI President Christyn Cianfarani was relentlessly upbeat in her portrayal of the Canadian military industry as a big player on an exciting world stage, a vigorous competitor we can all be proud of. The growing international sales that make a lot of people queasy—a recent poll showed 73% of Canadians disapproved of the Saudi LAV deal—are, for her, a cause for celebration.

“Well, just when we thought that CANSEC couldn’t get any bigger, clearly it has,” Cianfarani began, noting the conference had “representations from some 58 foreign countries, from Africa, Asia, South America, Europe and North America. CANSEC has become an important event for the global defence community.” She said Canadian military producers earned 60% of their revenues from exports in 2015, up from roughly 50% a year earlier.

Industry critics cite the statistic as proof of Canada’s growing economic dependence on arming dangerous international conflicts. For Cianfarani and her colleagues, however, they fall on the plus side of the ledger. In fact, she added that the Trudeau government should make military production a centerpiece of its economic development strategy.

Citing a new report, The State of Canada’s Defence Industry, 2014, produced by two government departments in collaboration with CADSI, Cianfarani hailed the economic impacts of military production, including some 63,000 jobs and an estimated $6.3-billion contribution to GDP. Upcoming spending on new equipment for the Canadian military represents “the opportunity of a generation” that can strengthen Canada’s “defence industrial base” and thereby fuel “the government’s innovation agenda,” she said. “Part of the opportunity is driving innovation through procurement.”

Presentation over, reporters immediately turned to the elephant in the room: the Saudi deal. Cianfarani was asked to address the critics’ discomfort with Canada selling weapons to a regime that beheads political dissidents and is waging a war in Yemen in which thousands of civilians have died.

“Well, first of all, as an industry association we certainly don’t take positions on the judicial practices of other nations,” she responded. “I would also add that, as I think it’s pretty clear, the values and interests of the country, as well as the foreign policy, is set by the government of Canada, which dictates to whom and what we are allowed to sell. So as an industry, our role is to simply follow the regulations.”

When a reporter took another run at the subject, asking how the industry would weigh economic considerations against the public’s moral discomfort, Cianfarani stuck to the same antiseptic, buck-passing script: “As we’ve continued to grow from 50 to 60 per cent of our revenue base in exports, I think it’s an important lever for our economy, but again, we are not going to make comments on the judicial practices of other countries. Nor are we responsible for setting the foreign policy of the country.”

When I spoke with company representatives on the convention floor, they too responded to the controversy over sales to repugnant regimes with well-rehearsed lines about not breaking any rules. Critics insist the reality is more complex. They see government and military industries as parts of a co-dependent, push-pull relationship where both parties have leverage over the other. Certainly, the government enlists military producers to help fulfil its own policy objectives, such as equipping the Canadian Armed Forces. But the industry itself, which controls a huge chunk of public dollars, and consequently holds major economic clout, has immense lobbying power and influence over the interpretation of the government policies that govern it.

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Steven Staples, vice-president of Ottawa’s Rideau Institute, says Canada’s involvement in unsavoury weapons deals is virtually guaranteed by a complex Canadian military procurement system that links domestic military equipment purchases to the production of for-export military goods in this country.

The current system dates back to the death of the Avro Arrow fighter jet, designed and built in Canada in the 1950s for use by the Canadian Air Force. The government of the day determined that Canada’s market was too small to economically justify the manufacture of complex weapons systems. Yet it didn’t want to become totally dependent on foreign suppliers or to forfeit all the jobs that would come with manufacturing military gear at home.

Canada therefore entered into a deal with the United States: Canadian companies would manufacture components for American weapons systems, which the federal government would then buy off-the-rack without having to shoulder all the costs of development and production. In other words, Canada offset the costs of supplying its own military by supporting the growth of an export-oriented military industry that could generate new revenue through foreign sales.

At one time, almost all of Canada’s military exports flowed to the United States. (Since U.S.-bound products are exempt from Canada’s export controls, plenty of Canadian weapons components were funneled to conflict zones and into the hands of dictatorships and human rights abusers the U.S. administration called friends.) But recently, as U.S. and European markets neared their saturation points, Canadian military suppliers began vigorously pursuing direct sales to “non-traditional markets” in places like the Middle East and Latin America.

The main takeaway from this, according to Staples, is that inevitably domestic Canadian military purchases today are followed by increased exports tomorrow. He says the current panic to secure the patronage of countries like Saudi Arabia is driven by post-9/11 domestic military spending, which “grew by leaps and bounds—sometimes growing by more than 10 per cent per year, year after year after year, to the point where we were spending more, in adjusted dollars, than we had been at any point since the Second War World—including the darkest days of the Cold War.”

This spending spree, says Staples, made growing numbers of jobs dependent on arms production and strengthened the military-industrial lobby. When the domestic boom ended, the other shoe dropped.

“Once [Canadian] spending starts to decrease, industry wants to export equipment even more. So they start looking at any market, and put the blinders on in terms of what the implications of sales to those markets might be. Because they’ve got all these people making machine guns, so now they have to sell machine guns somewhere. And they put pressure on the Canadian government to lower export controls, so now look what’s happening: we are sending $15 billion worth of armoured vehicles to the butchers of Saudi Arabia.”

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There are many prior examples of Canada’s weapons exports appearing at odds with Canadian values. In his 1985 book, Arms Canada: The Deadly Business of Military Exports, Ernie Regehr recalled a “bonanza” of military exports to the U.S. in the 1960s that was driven by “the war in Vietnam, which the Canadian public generally opposed, and for which even the Canadian government even occasionally professed distaste.” But, as Regehr noted, the boom was short-lived, with the inevitable end-of-war bust resulting “in a major dislocation within Canadian industry—especially the aerospace industry.”

Although then, as now, military production was sold as an economic panacea, Regehr cited various Cold War–vintage studies indicating that military spending actually had a stifling effect on civilian innovation, and that public investments in military production would have created more employment if they were directed to other sectors.

Are current controversies just more of the same? Not quite, says Peggy Mason, who served as Canada’s ambassador to the UN for disarmament under prime ministers Brian Mulroney and Jean Chrétien. Canada’s attempts to rein in its military manufacturers may have been half-hearted in the past, she says, but under the former Stephen Harper and current Justin Trudeau governments this country has sunk to a new low.

A lawyer by trade, and now President of the Rideau Institute, Mason has a lot of experience with institutional efforts to contain violence around the world. She was a special advisor to the Department of Foreign Affairs during the development of a UN action plan to fight the trade in elicit small arms, for example, and was an external faculty member at the now-shuttered Pearson Peacekeeping Centre (that trained Canadian soldiers in Peacekeeping). More to the point, Mason helped write the 1986 export guidelines for military goods, “which is still government policy, although frankly you would never know it,” she says.

Coming back to the Saudi deal, Mason explains that the guidelines stipulate military goods cannot be transferred to “countries whose governments have a persistent record of serious violations of the human rights of their citizens, unless it can be demonstrated that there is no reasonable risk that the goods might be used against the civilian population.” But the latter clause contains a loophole: in the past, small amounts of military goods were shipped to Saudi Arabia because government officials argued they would not be used against civilians.

As Saudi atrocities escalated—in Bahrain in 2012, where Saudi troops violently quelled a popular uprising, and most recently in the civil war in Yemen—Mason says it became impossible for Canada to argue the sale of Canadian LAVs did not violate its own policy. There is also conclusive evidence, she adds, that inside Saudi Arabia, LAVs “are being routinely used to viciously put down protests against the Shia population.”

“The UN itself has named and shamed Saudi Arabia for war crimes in Yemen—for systematically targeting civilians, markets, residential areas, hospitals. And they’ve even been put on the worst of all lists: the list for killing children.” It is clearly no longer remotely credible to suggest that Canada’s LAVs will not be used against civilians. Continuing with the military sales in spite of this means that Canada is “entering into the territory of potential complicity with war crimes,” she says.

The government counters by claiming it is concentrating on exerting influence where it can make a difference. At a speech at the University of Ottawa in March 2015, former global affairs minister Stéphane Dion said he approved the Saudi deal because “similar equipment would almost certainly be sold to Saudi Arabia by another country. Riyadh does not care [if] the equipment comes from a factory in Lima, Ohio, or Stirling Heights, Michigan, rather than one in London, Ontario.” In other words, if we don’t do this, someone else will.

Mason characterizes this argument as “so reprehensible that one doesn’t know where to start. It’s like saying ‘What’s the point of a Criminal Code because some people are going to break it.’ It’s an astounding argument.” She points out that Sweden and Belgium have cut military ties to Saudi Arabia, and there are indications Canada may have won the Saudi contract partly because Germany withdrew its own bid over ethical concerns.

“We can be on the side of strengthening arms export regulations so there will be a penalty for human rights abusers. Or we can make it easy for the abusers.” Opting for the latter, says Mason, “makes Canadian jobs dependent upon the oppression and murder of innocents abroad,” while working against our foreign policy interests by making Canada appear disingenuous and untrustworthy, thereby giving groups like ISIS “a recruiting tool that [they] can use very effectively.”

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On the floor of the EY Centre at last year’s CANSEC fair there was no evidence of these heated debates about international law or political morality. General Dynamics had an LAV on display, but it had been painted half in army green and half peacekeeper blue. Attendees would have struggled to visualize it involved in a desert operation, which might have been the point.

Though decades of regional economic development policies have distributed much of the day-to-day business of the “defence industrial base” to communities across the country, Ottawa is clearly the hub of this growing economic sector. CADSI is based here, as are key government agencies like the Canadian Commercial Corporation, which facilitates overseas sales and served as prime contractor on the Saudi LAV deal. Many military companies also maintain head offices in Ottawa to lobby government and co-ordinate their regional operations.

One of those companies is Raytheon International Inc. Canada, known in this country for maintaining the DEW line radar stations in the North. Raytheon’s newish Canadian president, Mark Nicol, a highly affable Australian, told me much of his job involves managing “offsets,” a system devised in the late-1970s to maintain a balance of trade between military imports and exports. The idea is that military products flowing into Canada from a company like Raytheon in the U.S. are supposed to be balanced by exports of equally valued Canadian products.

This casts Nichol as a kind of import-export broker: he brings international Raytheon equipment into Canada and draws on a network of 800 Canadian suppliers to send goods out of the country to fulfil offset requirements. Since internationally the company is a massive missile manufacturer (“We build air-to-air missiles, we build surface to air missiles, we build land attack missiles, we do the Javelin, the Tower, the Stinger and so on,” Nicol said), there’s plenty of room for Canadian contractors to feed into those global projects, and plenty of projects that Raytheon international wants to sell to Canada.

This largely bureaucratic function, involving a staff of six in Raytheon’s Ottawa headquarters, is separate from the firm’s 100-employee Ottawa facility dedicated to working on the DEW line radar stations. It also stands apart from Raytheon Canada’s ELCAN Optical Technologies subsidiary, a “centre of optical excellence in the world” employing 640 people in Midland, Ontario, as Communications Specialist Deborah Ratushniak reported. The company’s rifle sights manufacturing provides an interesting example of the process, described by Staples, where Canadian procurement becomes a platform for expanding weapons-related exports.

“The first rifle sight ELCAN manufactured was for the Canadian Forces and it’s become an international product line for the company, [with markets in] the U.S., Norway, Sweden, Germany, France, Chile, Peru, Brazil, Saudi Arabia, the United Arab Emirates,” said Ratushniak, who paused before adding, “Manufactured in Canada.”

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Exporting rifle sights and other products to Saudi Arabia may be a source of pride to industry insiders, but like the $15-billion LAV sale it will surely raise red flags for anyone concerned about abetting violence at the hands of despotic regimes. Many spokespeople at CANSEC are remarkably adept at extricating themselves from discussions about how their products are used. Despite the abundance of lethal hardware on display, they are quick to highlight other products they insist are innocuous or socially beneficial, using a a bloodless lexicon clearly designed to deflect attention from uncomfortable realities.

Enter Chris Pogue, a vice-president of General Dynamics Mission Systems, corporate cousin of the London, Ontario–based GD Land Systems (maker of the Saudi-bound LAVs), which employs between 700 and 800 people at its Ottawa facility in Bell’s Corners. When I asked him to define “mission systems” his response was poetic but not entirely illuminating.

The concept is “built on the idea that every platform that the military will use at some point has volumes of information that need to be presented to decision makers in an effective way,” he said, adding it’s “really centred around letting the soldiers, sailors, airmen and airwomen carry out their mission effectively.” (Ken Epps, a retired researcher at the church-sponsored Project Ploughshares who has followed GD Mission Systems for many years, would later describe it to me more straightforwardly: “They produce electronics for weapons systems including the M1 Abrams tank, for which they produce the fire control system to help aim the canons on the tanks. They have provided these systems for tanks used in Egypt, for example, where there would be concerns about human rights.”)

Eager to move our conversation forward, Pogue showed me a suite of products called Shield, designed to allow soldiers, police and civil emergency personnel to run communications apps on a secure network under conditions where other networks might be disrupted. In the City Shield version of the program, he explained, “you’d have facial recognition software, licence plate recognition, to allow police officers to more effectively monitor a city. Border Shield, you’re more likely to have longer range sensors, things that are going to give you more security for your borders and intrusion detection.

“The one I’m most excited about, honestly, is Emergency Shield,” added Pogue. The system “allows us to imagine taking the kind of broadband network connectivity you have today in the City of Ottawa and putting it in the hands of first responders when they deploy to places that have just suffered an earthquake…. We’re going to get to potentially help in those environments.”

Pogue was evasive about the proportion of GDMS’s business, relative to that intended for urban surveillance or battlefield operations, that is derived from this gentler type of product. “To be quite frank, I think it’s less bout the lucrativeness of then finding those underserved markets and bringing them capability,” he said. “I think if you don’t focus on that, you’ll get trapped in doing the wrong things for the wrong reasons.”

Later that day I went back to the pivoting weapons display at the front of the GD Missions Systems area at CANSEC 2016. On hand was Özgϋr Kϋrϋm, marketing and sales co-ordinator with the Turkish weapons company Aselsan, who explained that the system was produced by his company in partnership with GDMS. The companies jointly bid to have this system used in the Canadian Navy’s Halifax class frigates.

Despite the bid’s failure, Kϋrϋm insisted “we are not in Canada for a one-shot opportunity…We are partnering with General Dynamics [of Ottawa], initially for the North American market, but for third country markets as well.” He reports that Aselsan, which built the CANSEC 2016 program app, has “quite a good base” in the Middle East, North Africa and Central Asia, “so teaming up is a good opportunity to extend that market.”

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Epps notes that partnerships between Canadian and non-traditional market companies, such as the recent collaboration between Pratt & Whitney Canada and a Ukrainian aircraft manufacturer, have become more common. He adds that while the Trudeau government (unlike its predecessor) is planning to accede to a new global Arms Trade Treaty, the fine print does not cover licensing deals between western companies and third-party sellers, creating a potential loophole. The big players may be able to funnel their products to restricted markets and “circumvent more rigorous export controls” if they ship through partners based in countries with lower standards, says Epps.

Such expanding webs of deal-making offer proof, say critics, that the tail now wags the dog; that the primary aim of the industry is to supply the global weapons market rather than to facilitate the defence of Canada. Still, Staples believes the federal government could start to extricate itself from this murky trade by using the existing “offset” system to reorient Canadian military production toward civilian goods.

Since the current system doesn’t require that purchases of foreign military products be offset specifically by outgoing Canadian military products, “when we buy missiles for our frigates, we could require them [foreign military suppliers] to invest in a new Arctic observation satellite, or engines for a new passenger airline,” he says. “That’s a way of promoting investment that doesn’t contribute to more military production in Canada and more weapons exports.”

Given the momentum of the past seven decades, though, even this partial solution feels like a long shot. In the meantime, the world’s hotspots are being weaponized still further, conflicts are becoming deadlier and more intractable, and Canada is right there at the centre of things, making a tidy profit to boot.

Story by Stephen Dale / Photos by Ben Welland

Stephen Dale’s latest book is Noble Illusions: Young Canada Goes to War (Fernwood).